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Rating Action:

Moody's upgrades BBVA USA's ratings (A3 long-term senior unsecured) following its acquisition by PNC, concluding review

01 Jun 2021

New York, June 01, 2021 -- Moody's Investors Service (Moody's) has upgraded the ratings and assessments of BBVA USA Bancshares, Inc. and its subsidiaries, including the standalone Baseline Credit Assessment (BCA) of its bank subsidiary BBVA USA, with the exception of the Prime-1 short-term deposit rating of BBVA USA, which was affirmed. The rating action follows the closing of PNC Financial Services Group, Inc.'s (PNC, A3 senior stable) acquisition of BBVA USA Bancshares, Inc. and its subsidiaries (collectively referred to as BBVA USA). The rating action concluded the review for upgrade of BBVA USA's ratings initiated on 16 November 2020.

A complete list of affected ratings and entities can be found at the end of this press release.

RATINGS RATIONALE

The upgrade of BBVA USA's ratings and assessments reflect the benefits to BBVA USA's creditors resulting from the acquisition. The upgraded ratings and assessments as well as outlooks match those of PNC and its subsidiaries. Moody's said that as a commonly controlled Federal Deposit Insurance Corporation (FDIC)-insured depository institution, it considers BBVA USA's credit profile to be aligned with PNC's FDIC-insured US bank and accordingly it has the same ratings profile. This reflects the likely benefits to the BBVA USA's creditors stemming from the cross-indemnification provisions of the Federal Deposit Insurance Act.

With the acquisition close, the holding company BBVA USA Bancshares, Inc. was merged into The PNC Bancorp Financial Services Group, Inc., under The PNC Financial Services Group, Inc. and no longer exists. Additionally, BBVA USA Bancshares Inc.'s $230 million of preferred stock was retired in full. As a result, Moody's will withdraw the issuer and preferred stock ratings of BBVA USA Bancshares, Inc. following today's action. The ratings and assessments of the bank subsidiary BBVA USA will remain outstanding until it is merged into PNC Bank, N.A., which PNC expects to occur in October.

FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS

Moody's has equalized BBVA USA's baseline credit assessment (BCA) to that of PNC Bank, N.A., following the closing of the acquisition.

An upgrade of BBVA USA's standalone BCA is unlikely absent an enduring increase in earnings or capital, all without an increase in the company's risk profile. However, a higher BCA would likely lead to a ratings upgrade.

Moody's could downgrade BBVA USA's standalone BCA if the company encounters unexpected challenges in the integration of BBVA USA or if the company's asset quality deteriorates noticeably or its profitability suffers a material downturn. A lower BCA would likely lead to a ratings downgrade.

The principal methodology used in these ratings was Banks Methodology published in March 2021 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1261354. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

DEBT LIST

Upgrades:

..Issuer: BBVA USA

.... Adjusted Baseline Credit Assessment, Upgraded to a2 from baa1

.... Baseline Credit Assessment, Upgraded to a2 from baa1

.... LT Counterparty Risk Assessment, Upgraded to A1(cr) from A3(cr)

.... ST Counterparty Risk Assessment, Upgraded to P-1(cr) from P-2(cr)

.... LT Counterparty Risk Rating, Upgraded to A2 from Baa1

.... ST Counterparty Risk Rating, Upgraded to P-1 from P-2

.... Issuer Rating, Upgraded to A2 from Baa2, Outlook Changed To Negative From Rating Under Review

....Subordinate Bank Note Program, Upgraded to (P)A3 from (P)Baa2

....Senior Unsecured Bank Note Program, Upgraded to (P)A2 from (P)Baa2

....ST Bank Note Program, Upgraded to (P)P-1 from (P)P-2

....Subordinate Regular Bond/Debenture, Upgraded to A3 from Baa2

....Senior Unsecured Regular Bond/Debenture, Upgraded to A2 from Baa2, Outlook Changed To Negative From Rating Under Review

....Senior Unsecured Deposit Rating, Upgraded to Aa2 from A2, Outlook Changed To Negative From Rating Under Review

..Issuer: BBVA USA Bancshares, Inc.

.... Issuer Rating, Upgraded to A3 from Baa2, Outlook Changed To Stable From Rating Under Review

....Pref. Stock Non-cumulative Preferred Stock, Upgraded to Baa2(hyb) from Ba1(hyb)

..Issuer: Phoenix Loan Holdings

....Pref. Stock Non-cumulative Preferred Stock, Upgraded to Baa2(hyb) from Ba1(hyb)

Affirmations:

..Issuer: BBVA USA

.... Deposit Rating, Affirmed P-1

Outlook Actions:

..Issuer: BBVA USA

....Outlook, Changed To Negative From Rating Under Review

..Issuer: BBVA USA Bancshares, Inc.

....Outlook, Changed To Stable From Rating Under Review

..Issuer: Phoenix Loan Holdings

....Outlook, Changed To Stable From Rating Under Review

REGULATORY DISCLOSURES

For further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. Moody's Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.

For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

The ratings have been disclosed to the rated entity or its designated agent(s) and issued with no amendment resulting from that disclosure.

These ratings are solicited. Please refer to Moody's Policy for Designating and Assigning Unsolicited Credit Ratings available on its website www.moodys.com.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Moody's general principles for assessing environmental, social and governance (ESG) risks in our credit analysis can be found at http://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1263068.

The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the EU and is endorsed by Moody's Deutschland GmbH, An der Welle 5, Frankfurt am Main 60322, Germany, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody's office that issued the credit rating is available on www.moodys.com.

The Global Scale Credit Rating on this Credit Rating Announcement was issued by one of Moody's affiliates outside the UK and is endorsed by Moody's Investors Service Limited, One Canada Square, Canary Wharf, London E14 5FA under the law applicable to credit rating agencies in the UK. Further information on the UK endorsement status and on the Moody's office that issued the credit rating is available on www.moodys.com.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Sadia Nabi
Asst Vice President - Analyst
Financial Institutions Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

Andrea Usai
Associate Managing Director
Financial Institutions Group
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

No Related Data.
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